Commenting on the China rate cuts, Richard Zhang, Head of China Business EMEA at CBRE, said:
“The PBOC’s decision to cut its benchmark rate and reserve requirement ratio, and the longer term goal to liberalise the capital account, is likely to lead to more Chinese capital being deployed overseas, with London likely the number one city for direct property investment. It is possible that current uncertainties which could hamper decision making. There is a chance of some capital controls being re-introduced which would provide a short term basis obstacle. But these are mainly aimed at private wealth so the negative effect on direct commercial property investment abroad will be minimal. Most of investments targeting London so far from china are from Chinese sovereign funds, institutional investors and large state owned enterprises; their imperative to diversity their asset base remains which will mean an ongoing need to build up their stock of overseas real estate assets.
“Year to date, we have already recorded £2.5bn of property deals from mainland Chinese investors into London alone, and forecast the total transaction volume to be well over last year’s £3bn for the whole of the UK. With Chinese President Mr Xi’s October visit on the horizon, the first in 11 years, we believe British-Chinese relations will reach new heights, and we fully expect non-property Chinese investment into the UK to hit £6bn this year, nearly double last year’s £3.5bn.”